Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Provision for Income Taxes

The provision for income taxes consists of the following:

	Year Ended December 31,
(in millions)	2019			2018			2017
Current:
Federal	$	53		$	41		$	46
State	12			7			1
Total Current	65			48			47
Deferred:
Federal	(2		)	(3		)	12
State	(5		)	4			3
Revaluation due to legislative changes	—			—			(40		)
Total Deferred	(7		)	1			(25		)
Total	$	58		$	49		$	22

U.S. Federal Statutory Income Tax Rate Reconciled to Effective Tax Rate

The U.S. federal statutory income tax rate reconciled to our effective tax rate is as follows:

	Year Ended December 31,
	2019							2018							2017
(in millions, except percent)	Pre-Tax Income		Tax Expense/(Benefit)			Percent of Pre-Tax Income (Loss)		Pre-Tax Income		Tax Expense/(Benefit)			Percent of Pre-Tax Income (Loss)		Pre-Tax Income		Tax Expense/(Benefit)			Percent of Pre-Tax Income (Loss)
	$	270						$	241						$	200
U.S. federal statutory tax rate			$	57		21	%			$	51		21	%			$	70		35	%
State income taxes, net of federal benefit			20			7				18			8				10			5
Tax rate change			—			—				—			—				(40		)	(20	)
Nondeductible meals, entertainment and penalties			1			—				1			—				1			—
Stock based compensation			(1		)	—				(9		)	(4	)			(15		)	(7	)
Uncertain tax positions			—			—				1			—				4			2
Tax credits			(7		)	(3	)			(5		)	(2	)			(4		)	(2	)
State and tax return to provision adjustments			(8		)	(3	)			(7		)	(3	)			(5		)	(3	)
Sec 199 benefits			(1		)	—				—			—				(3		)	(1	)
Other			(3		)	(1	)			(1		)	—				4			2
Total			$	58		21	%			$	49		20	%			$	22		11	%

Significant Components of Deferred Tax Assets and Liabilities

Significant components of our deferred tax assets and liabilities are as follows:

	Year Ended December 31,
(in millions)	2019			2018
Deferred tax assets:
Net operating losses (federal and state)	$	3		$	3
Accrued expenses	10			8
Accrued workers' compensation costs	9			9
Stock based compensation	3			8
Tax benefits relating to uncertain positions	1			—
Tax credits (federal and state)	7			7
Total	33			35
Valuation allowance	(5		)	(7		)
Total deferred tax assets	28			28
Deferred tax liabilities:
Depreciation and amortization	(27		)	(24		)
Deferred service revenues	(41		)	(62		)
Prepaid health plan expenses	(1		)	—
Prepaid commission expenses	(19		)	(9		)
Total deferred tax liabilities	(88		)	(95		)
Net deferred tax liabilities	$	(60	)	$	(67	)

Reconciliation of Beginning and Ending Valuation Allowance

A reconciliation of the beginning and ending amount of the valuation allowance is presented in the table below:

	Year Ended December 31,
(in millions)	2019			2018		2017
Valuation allowance at January 1	$	7		$	7	$	6
Credited/ charged to net income	(2		)	—		1
Valuation allowance at December 31	5			7		7

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) is presented in the table below:

	Year Ended December 31,
(in millions)	2019			2018			2017
Unrecognized tax benefits at January 1	$	6		$	6		$	1
Additions for tax positions of prior periods	1			1			4
Additions for tax positions of current period	1			—			1
Reductions for tax positions of prior period:
Lapse of applicable statute of limitations	(1		)	(1		)	—
Unrecognized tax benefits at December 31	$	7		$	6		$	6